By submitting your personal information, you agree to receive emails regarding relevant products and special offers from TechTarget and its partners. You also agree that your personal information may be transferred and processed in the United States, and that you have read and agree to the Terms of Use and the Privacy Policy.

Analysts see 3PAR as the latest piece in Dell's strategy to transform itself into a major data storage technology player, and said the deal will change its relationship with long-time storage partner EMC Corp. Dell began transforming its storage portfolio by acquiring iSCSI vendor EqualLogic for $1.4 billion in early 2008, and added network-attached storage (NAS) vendor Exanet and primary data reduction startup Ocarina Networks this year.

When the 3PAR deal closes, Dell will have 3PAR's T-Class Fibre Channel (FC) storage area network (SAN) on the high end, the 3PAR F-Class FC SAN, EqualLogic PS iSCSI SAN and EMC/Dell Clariion CX4 FC/iSCSI SAN in the midrange, and the PowerVault MD iSCSI and AX4-5 FC/iSCSI entry-level storage systems. On the NAS side, Dell sells its PowerVault NX NAS, and EMC/Dell NS and NX4 unified storage with plans to add an EqualLogic Exanet unified system later this year. The 3PAR, EqualLogic, PowerVault and EMC Clariion and NS systems are all separate platforms. Dell also has a DX object storage platform.

Dell's diverse product lineup will likely require some integration, at least on the storage management side. During a conference call to discuss the acquisition, Dell executives and 3PAR CEO Dave Scott talked of building a unified platform that would use Exanet and Ocarina technologies across its storage systems. 3PAR's storage supported Exanet NAS gateways before Dell picked up Exanet's assets, and Scott said Ocarina's deduplication and compression complement 3PAR's thin provisioning technology.

"This is a real opportunity for us to drive toward unified storage with the Exanet technology that we already have, and the Ocarina technology that can be potentially integrated in a future roadmap," Scott said.

Brad Anderson, senior vice president of Dell's enterprise storage group, added that the deal was "a long-term opportunity to drive a unified Dell storage lineup. There are technologies we want to drive across our entire storage lineup."

But Dell also faces an engineering challenge, Taneja Group analyst Arun Taneja said.

"Behind the scenes they'll be doing lot of unification," Taneja said. "The major engineering challenge will be that in about a year from now the market will expect back-end commonality and front-end management commonality. Eventually people will look for Dell to give them a single console."

What about EMC?

As was the case with EqualLogic, the 3PAR acquisition gives Dell storage systems that compete with products it sells through its OEM deal with EMC. Anderson claimed the Dell-EMC relationship remains strong but others wonder how long the two vendors can remain rivals and partners.

"EMC is a very important partner of ours and we have worked closely together," Anderson said. "Our plans are not going to change. We'll continue to offer Dell/EMC Clariion as well as EMC's deduplication and NAS."

But Taneja said it's a matter of time until Dell and EMC go separate ways.

"EMC has to know that Dell is not a long-term customer," Taneja said. "EMC was Dell's training bike until Dell learned how to deal with that space. That partnership has been fantastic for Dell, and it's been good for EMC, too, but it's not a marriage that will last."

Enterprise Strategy Group analyst Mark Peters said Dell is beefing up its storage portfolio as part a move to compete with IBM Corp. and Hewlett-Packard (HP) Co. as an overall IT services company.

"The story for me here is bigger than storage," he said. "It's a more coordinated effort for Dell to be considered in the same ranks as the real big boys. Dell wants to be IBM or HP, and this is another step in that direction. Dell wants to be a grownup and not an adolescent."

Dell paid a big price for 3PAR. The $18 per share acquisition price was nearly twice of 3PAR's Friday closing price of $9.65, and the $1.15 billion price tag represents more than four times 3PAR's annual sales. There have been rumors that HP would buy 3PAR, and the acquisition price indicates there may have been serious interest from at least one other suitor.

Dell executives would like to have the same success with 3PAR's Fibre Channel SAN products as it has with EqualLogic on the iSCSI front. EqualLogic's annual revenue has increased from $100 million to $800 million since the Dell acquisition, according to company executives. Dell plans to keep the 3PAR brand, just as it has done with EqualLogic. Anderson said he hopes to keep 3PAR employees, and Dell has offered positions to Scott and other 3PAR senior managers. The deal is expected to close by the end of the year.

"We're not contemplating any changes in 3PAR," Anderson said. "We will invest more to drive the technology a whole lot faster."